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Saudi power firm ACWA eyes SAfrican projects despite currency concerns

Thu 9th June, 2016 7:46am
DUBAI, June 9 (Reuters) - Saudi-based ACWA Power 
 IPO-ACWA.SE  expects to win further business in South Africa 
this year as the power plant developer rides out concerns about 
the country's currency to tap into its need for more 
electricity, the firm's chief executive told Reuters. 
    South Africa's economy has been hit hard by a significant 
fall in the rand's value against the dollar, while businesses 
have also faced power shortages as state utility Eskom was 
forced to cut some supplies almost daily earlier this year.*:nL5N1895FJ 
    For developers such as ACWA the South African government's 
plans to improve power supplies provides significant 
opportunities, although there are also challenges due to the 
currency, according to Chief Executive Paddy Padmanathan. 
    These include increased construction costs as materials are 
brought in from abroad, being paid for the electricity produced 
in rand, and the potential future risks over being able to 
freely convert rand into dollars. 
    However, with power plants being long-term investments and 
the continuing availability of funding from local banks to back 
projects, Padmanathan remains optimistic on South Africa.    
    "There's no point in getting excited about the rand getting 
devalued today or doing this yesterday, or (President Jacob) 
Zuma said this the day before yesterday, we have to look at it 
for the medium to long term and ride out the cycles," he said. 
    "We are providing electricity and, where we do, water, two 
principle commodities which are fundamental to life, not just 
economic development, so they are the last thing which people 
are going to pull the plug on." 
    ACWA aims to close financing for the 100 megawatt Redstone 
Concentrating Solar Power (CSP) thermal plant in July, the same 
month as it expects to be awarded two further build contracts: 
for the 300 MW Khanyisa coal-fired power plant in Mpumalanga 
province, and the 125 MW Solis 1 thermal solar plant in Northern 
Cape province, where it is partnered with BrightSource Energy 
 BRSE.O . 
    Should they be awarded to ACWA, the firm hopes to close the 
financing to back the $1 billion Solis 1 plant by the end of the 
year, while the Khanyisa plant would cost around $600 million. 
    ACWA is also interested in a gas-fired power plant-building 
programme, which Padmanathan expects to be announced later this 
    The increasing interest in renewables from Middle Eastern 
and African governments, which make up the majority of the 13 
countries in which ACWA operates, means that around half of all 
ACWA's business is now in "clean" energy. 
    Padmanathan was "very optimistic" about Saudi Arabia's plans 
for generating 9,500 MW of renewable energy under its Vision 
2030 economic plan, while he was also "very excited" by Dubai's 
announcement for 1,000 MW of CSP capacity.*:nL8N18U3QX 
    The firm has already bid for the 800 MW third phase of the 
Sheikh Mohammed bin Rashid al-Maktoum Solar Park, with a 
decision on the winner from operator Dubai Electricity and Water 
Authority likely in just over a month in his view.*:nL5N1813E5 
    Meanwhile the closing of the financing for the 120 MW 
Khalladi wind farm in Morocco was expected this week, 
Padmanathan added. 
 (Reporting by David French; Editing by Greg Mahlich) 
 ((; +971 4 362 5864; Reuters 
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